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WASHINGTON (AP) - Congressional Democrats vowed Tuesday to all but strip AIG executives of their $165 million in bonuses as expressions of outrage swelled in Congress over eye-catching extra income for employees of a firm that has received billions in taxpayer bailout funds.

“Recipients of these bonuses will not be able to keep all of their money,” declared Senate Majority Leader Harry Reid in an unusually strong threat delivered on the Senate floor.

“If you don’t return it on your own, we will do it for you,” said Chuck Schumer of New York.

The bonuses were paid under legal contracts, part of a program that had been disclosed in advance filings that American International Group Inc. made with the government.

Republicans said President Barack Obama and his administration should have leaned harder on AIG executives to reject the bonuses. The complaints sparked a low level hum about whether Treasury Secretary Timothy Geithner could or should survive this latest political storm.

“I don’t know if he should resign over this,” said Sen. Richard Shelby, R-Ala. “He works for the president of the United States. But I can tell you, this is just another example of where he seems to be out of the loop. Treasury should have let the American people know about this.”

If he tried to stop AIG from paying out the full bonuses beforehand, as presidential economic adviser Lawrence Summers told The Associated Press, Geithner obviously failed.

For now, congressional Democrats weren’t calling for Geithner’s resignation, but they weren’t volunteering much confidence in him, either. White House press secretary Robert Gibbs did say that Obama had confidence in his treasury secretary, and Gibbs sought to switch the focus to changes that are in the works. He said Obama wants both financial regulation reform and a new “resolution authority” to deal with giants like AIG that get into complex financial trouble.

New York Attorney General Andrew Cuomo said the company last week had paid bonuses of $1 million or more to 73 employees, including 11 who no longer work for the failed insurance giant.

As lawmakers raised their voices on TV, administration officials moved to reassure Congress, the markets and the nation that Geithner had urged AIG chief executive Edward Liddy last week to find a way to renegotiate contracts that called for the bonuses.

“He recognized that you can’t just abrogate contracts willy-nilly, but he moved to do what could be done,” Summers, Obama’s chief economic adviser, told The Associated Press in an interview Tuesday.

Even though AIG’s bonus plans were disclosed last year, populist outrage and threats poured forth from Capitol Hill on Tuesday.

House and Senate Democrats were crafting separate bills to tax up to 100 percent of the big bonuses awarded by companies that were rescued by taxpayer money.

Separately, House Financial Services Committee Chairman Barney Frank, D-Mass., said the government should assert its rights as the owner of about 80 percent of AIG and sue to recover the bonuses.

“The time has come to exercise our ownership rights. We own most of the company. And then say, as owner, ‘No, I’m not paying you the bonus. You didn’t perform. You didn’t live up to this contract,’” Frank told reporters.

AIG would not be the only firm named by legislation in either the Senate or the House, but there was no question whose executives were the inspiration.

“They’re not going to get the financial benefit of those bonuses,” said Senate Finance Committee Chairman Max Baucus, D-Mont.

In the House, Reps. Steve Israel, D-N.Y., and Tim Ryan, D-Ohio, introduced a bill that would that would tax at 100 percent bonuses above $100,000 paid by companies that have received federal bailout money.

“We will use any means necessary,” said Ryan. “It boggles my mind how these executives can be so unaware of what the American people are going through.”

The Internal Revenue Service currently withholds 25 percent from bonuses less than $1 million and 35 percent for bonuses more than $1 million.

The Obama administration said it was trying to put strict limits on how future government bailout dollars could be used. But sharp questions have been raised about what the administration knew about the bonuses _ and when.

AIG also was singed at a banking committee hearing on regulating the insurance industry.

“One way or another, we’re going to try to figure out how to get these resources back,” said Christopher Dodd, D-Conn., the panel’s chairman.

Sen. Jon Tester, D-Mont., said AIG executives “need to understand that the only reason they even have a job is because of the taxpayers.”

Liddy is to testify Wednesday before a House subcommittee.

On Monday, Obama lambasted the insurance giant for “recklessness and greed” and pledged to try to block payment of the bonuses. Obama said he had directed Geithner to determine whether there was any way to retrieve or stop the bonus money.

The financial bailout program remains politically unpopular and has been a drag on Obama’s new presidency, even though the plan began under his predecessor, President George W. Bush. The White House is aware of the nation’s bailout fatigue; hundreds of billions of taxpayer dollars have gone to prop up financial institutions that made poor decisions, while many others who have done no wrong have paid the price.

Sen. Charles Grassley suggested in an Iowa City radio interview on Monday that AIG executives should take a Japanese approach toward accepting responsibility by resigning or killing themselves.

“Obviously, maybe they ought to be removed,” the Iowa Republican said. “But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.”

Grassley said Tuesday he didn’t actually mean for AIG employees to kill themselves.

AIG reported this month that it lost $61.7 billion in the fourth quarter of last year, the largest corporate loss in history, and it has benefited from more than $170 billion in a federal rescue.

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